Deutsche Telekom In Talks To Merge T-Mobile USA With MetroPCS

October 3, 2012

redOrbit Staff & Wire Reports – Your Universe Online

Deutsche Telekom, the German company that owns T-Mobile USA, said on Tuesday that it is in talks with MetroPCS to combine their U.S. wireless businesses, a deal that would give T-Mobile USA the heft it needs to compete with wireless giants AT&T and Verizon.

Dallas-based MetroPCS also confirmed that discussions between the two firms are underway.

The plan includes merging T-Mobile USA and MetroPCS into one company, in which Deutsche Telekom would hold the majority of shares, the German carrier said in a statement.

However, “talks are at a stage where significant issues have not yet been finalized, contracts have not yet been signed and the conclusion of the transaction is still not certain.”

“The board of management and supervisory board of Deutsche Telekom have therefore not yet taken the resolutions necessary for such a transaction.”

T-Mobile USA has been scrambling to curtail customer losses it has suffered, in part, because it lacks the rights to sell Apple´s iPhone devices. The Deutsche Telekom subsidiary is the No. 4 cellphone company in the United States, with 33.2 million subscribers.

Adding the 9.3 million subscribers of MetroPCS, the No. 5 U.S. cellphone company, would still leave T-Mobile lagging behind Sprint Nextel Corp., the nation´s third-largest mobile service provider.

But the deal would give T-Mobile access to additional spectrum, a critical benefit for carriers as they seek to grow their capacity for wireless broadband.

A Bloomberg News report Tuesday afternoon cited people with knowledge of the matter as saying that Deutsche Telekom´s supervisory board is scheduled to meet on Wednesday to approve the transaction, which would involve multiple steps, including a stock swap.

Shares of MetroPCS rose 18 percent on Tuesday, closing at $13.57, giving the company a market value of $4.9 billion. Meanwhile, shares of Deutsche Telekom´s stock rose 1.3 percent, closing at 9.74 euros on the Frankfurt exchange after spiking as high as 4.4 percent during the trading day. The company has a market capitalization of 42.1 billion euros ($54.4 billion).